There has been a subtle shift in tone at the International Monetary Fund since
Christine Lagarde took over as managing director from the disgraced
Dominique Strauss-Kahn nine months ago.

First, the bail-out fund no longer appears to be scared of spooking the markets with honest analysis. And second, and perhaps more importantly, it has begun toning down its austerity rhetoric.

On the face of it, Tuesday's World Economic Outlook (WEO) should have been a cause for celebration. After downgrading growth in January, the IMF revised its forecasts back up a little. Global growth will be 3.5pc this year, not 3.3pc, and 4.1pc in 2013, a marginal improvement on the 4pc predicted in January.

There has been a "reacceleration of activity" with "high frequency indicators [pointing] to stronger growth". Even the recession in the eurozone won't be as deep as feared, with contraction of just 0.3pc this year – not 0.5pc.

But the IMF's language cast a cloud over the outlook. While past WEOs might have stopped with the admission that the recovery remained "very fragile", chief economist Olivier Blanchard this time went on to flesh out the "tail risks".

For the first time, those risks included the prospect of a eurozone break-up – even describing the "full-blown panic in financial markets and depositor flight from several banking systems" that would follow. The costs of disintegration were impossible to quantify, but "could cause major political shocks that could aggravate economic stress to levels well above those after the Lehman collapse".

The report went on to describe "an oil supply shock related to Iran" that could lead to "adverse feedback loops" across the world that might plunge the global economy into "a major slump reminiscent of the 1930s". The Great Recession would become the Great Depression, mark 2.

Then there were the quantifiable risks, such as a manageable escalation in the euro crisis or a 50pc oil price spike, both of which would shave between one and two percentage points off global growth. Just to be clear, Blanchard said he had a "feeling that at any moment things could well get very bad again".

The risks remain with the advanced economies, where debt levels are high and austerity taking its toll. Some countries, the UK among them, are hooked on low interest rates. Others, like the euro periphery, have been locked out of the markets.

But, having been the high priest of austerity as the way of dealing with the debts, the IMF conducted a climb-down of sorts. "Fiscal tightening can generally be expected to reduce short-term growth," it said, but the impact was probably harsher than "identified in earlier studies".

In fact, it showed that austerity could slow growth so much that debt as a proportion of GDP would rise – an argument used by Labour. "Relatedly, it may take time for financial markets to reward fiscal tightening. Therefore, borrowing costs could actually rise as the deficit narrows." Punishment, as it were, for good behaviour.

The analysis may help persuade markets to be more forgiving of countries that are cutting spending but suffering depleted growth as a result. It could also support the IMF's calls for countries to stick with austerity but "backload" it.

In the meantime, "in the current environment of limited policy room", it urged central banks to act. The Bank of England "can further ease its monetary policy stance" by printing more money, the report said. But it was more prescriptive with the European Central Bank, which "should lower its policy rate while continuing to use unconventional policies to address banks' funding and liquidity problems".

After all, as the IMF made clear, the improving outlook does not mean the risks aren't terrifying.